A.M. Best has withdrawn the ratings of Intercona Re, the captive reinsurer of Nestlé, after the company requested to no longer partake in the ratings agency’s interactive rating process.
The final rating received by Intercona was an affirmation of its financial strength rating of A+ (Superior) and its long-term issuer credit rating of “aa-”.
The outlook of the credit ratings of the Switzerland-based captive were stable.
The ratings were reflective of Intercona’s “very strong” balance sheet strength, its strong operating performance, neutral business profile, and appropriate enterprise risk management.
Additionally, the ratings factored in rating enhancement, reflecting the stronger credit profile of its parent company.
The business profile assessment of Intercona is a factor of its role as Nestlé’s captive reinsurer, in which it provides the first layer of reinsurance protection on the group’s global insurance programme, providing a diverse underwriting portfolio by geography and product.
A key part of its parent’s overall risk management framework, Intercona assists with the mitigation of risk exposures and loss prevention.
The company’s five-year average (2013 to 2017) combined ratio of 90 percent is evidence of its strong operating performance and ability to withstand volatility from large loss events.
The captive’s disciplined underwriting enabled the company to report pre-tax profits of CHF 77.1 million (excluding movement of equalisation and fluctuation reserves), following a financial year loss of CHF 49.2 million the year before, primarily driven by a natural catastrophe loss.
A.M. Best’s expectation for the company’s audited 2018 results is for continued profit and improved underwriting performance.